Los Angeles daily herald., 1887-07-31
DoUTY DTsCOURsEs
About the Western Deyel-
Opment Company.
A WHEEL WITHIN A WHEEL.
He Speaks of the Conditions Under
which the Santa Monica Road
was Purchased.

Associated Press Dispatches to the Herald
SAN FRANCISCO, July 30.-At to-
days session of the Pacific Railroad
Commission T. S. Douty testified in
regard to the affairs of the Western
Development Company, the principal
shareioitiers Of which, he said, were
Messrs. Stanford, Hopkins, Crocker
and Cotton. Douty stated that the
Development Company used the Cen
tral Pacific as Il sort of bank, but never
overdrew the account, and the Central
Pacific is now indebted to the Devel-
opment Company for work done. He
further stated that the liabilities Of the
Development Company are about S10,-
OOO, 900 or $l2, 900, 900, and the assets
about the same.
Commissioner Little asked Douty If
it was not fact that as managers of
the Western Development Company,
Stanford, Huntington, Hopkins and
Crocker advanced the money of the
Central Pacific to carry on the COM
pany and then charged the Central
Pacific profit of ten per cent. on all
work done and material furnished.
Witness stated that he did not un-
derstand that the funds belonged to
the Central Pacific. As for the 10 per
cent. profit above the actual cost, that
was tocover the employment of super
intendents and the use of tools.
"Did not the Western Development
Company use all the shops and tools
of the Central Pacific ?"
"It never used anything that it did
not pay for"
Don't you think it would have
been the business OF good railroad
managers to repair and reconstruct its
lines without the intervention OF an
other corporation in the way you have
described"
THAT / cannot tell" said Douty.
l am not railroad expert. thought
at the time that as the Western De-
velopment company had the organiza-
ton necessary to do the work, it was
good business policy to employ it,"
"Did you ever hear OF any other
railroad corporation transacting its
business that way"
Witness said he had never heard of
such thing, but that was not saying
it had not been done.
THE SANTA MONICA ROAD.
From this the witness detailed the
purchase of the Colorado Steam Navi-.
cation Company's property and the
Los Angeles and Independence rail-
road by the Western Development
Company. The latter was purchased
from John p. Jones and it now pays a
rental to the Western development
Company of $16s3 per month. The
purchase was made by purchase of
stock, as the road had no bonds.
THE Pacific IMPROVEMENT COMPANY
Was organized in November. 1873. 1t
constructed the Southern Pacific of
Arizona and New Mexico line from
Soledad to San Miguel, and is now en-
gagged in building in California and
Oregon to the State line. The COM
pany is to receive for the construction
OF the road from Delta to the State
line, $4, 500 900 in bonds, and $4,000
shares OF stock The stock has all
been delivered and $317 900 worth Of
bonds also. The stockholders of the
California and Oregon road had OBJ
tanned control OF the Oregon and Cali
fornia, and the Pacific Improvement
Company is now engaged in building
sixteen miles which will connect the
two roads near the State line. Dur
ing the construction of the California
and Oregon road the Central Pacific
received the profits of the road SO far
as it was operated.
The Commission then adjourned till
Monday.